VentureBeat

The buzz around the growth of virtual world site, Second Life, is drawing more scrutiny from real-world regulators who fear they’re losing grip with the growing economy.

The site appears to have hit a sort of critical mass — and the attention is fueling even more activity.

A U.S. congressional committee has launched an investigation of the site, to see that people pay taxes properly on income they make at the site. Outsiders are scratching their heads at reports that several thousand people are pulling in $20,000 annual incomes by selling virtual goods and services, and saying “How can I get a piece of this?” Silicon Valley venture capitalist Bill Tai has been pitching Second Life founder, Philip Rosedale, on the idea of creating a central bank, which Tai would — benevolently, of course — run himself. Rosedale has held him off.

And now there’s a marketing start-up, Crayon, which says its launch Thursday will be the first real business to launch inside of the site.

Up to $500,000 in transactions take place daily at Second Life, and the economy is growing by 10 to 15 percent a month.

FBI investigators want to charge two men for spying in Silicon Valley to benefit China, and they say it is just the tip of a massive effort by the Chinese government to set up front companies to do this sort of thing.

In the latest case, they say Lan Lee, an American citizen, and Yoefei Ge, a Chinese national, stole chip designs and software from their employers NetLogic Microsystems of Mountain View and Taiwan Semiconductor Manufacturing Co. in San Jose, and planned to go into business with the Chinese government. The Mercury News has the story about it today (reg required):

The case highlights China’s role as the main adversary in a complex game of 21st-century espionage where many agents aren’t trained spies in trench coats but businessmen, students and researchers. Silicon Valley, counterintelligence experts say, is ground zero.

“Silicon Valley is a hotbed” of economic espionage, said Don Przybyla, who heads a FBI counterintelligence unit in San Jose. The valley is home to many of the estimated 3,000 Chinese front companies nationwide set up to steal secrets and acquire technology, according to the FBI.